IN LABOUR APPEAL COURT OF SOUTH AFRICA HELD AT JOHANNESBURG

CASE NO: CA5/2007

In the matter between: SOUTH AFRICAN MUNICIPAL WORKERS 1st APPELLANT UNION (SAMWU) AA EWERTS & 16 OTHERS 2nd to 18th APPELLANTS and KANNALAND MUNICIPALITY RESPONDENT

Judgment

Tlaletsi AJA

Introduction

[1] This is an appeal from a judgment of Nel AJ sitting in the Labour Court

in a trial relating to a dismissal dispute between the appellants and the

respondent. The first appellants contended that the second to

eighteenth appellants (the individual employees) who were all

members of the first appellant, a representative trade union

(SAMWU), were unfairly dismissed by the respondent on 30

November 2004. The respondent on the other hand, contended that

the dismissal of the individual employees was based on its operational

requirements and was fair.

[2] The dispute concerning the fairness of their dismissal was referred to

the South African Local Bargaining Council-Western Cape (the

Bargaining Council). The dispute remained unresolved as at 27

November 2004 and a certificate to that effect was issued by the

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Bargaining Council on 5 December 2004. The matter was referred to

the Labour Court for adjudication.

[3] It is perhaps apposite to state that the matter was heard by the

Labour Court from 11 to 15 September 2006. Only the respondent

tendered oral evidence.

[4] The Labour Court gave its judgment on 23 January 2007. The Labour

Court found that the dismissal of the individual employees was

substantively fair but procedurally unfair. Although the Labour Court

found the dismissal to be procedurally unfair, it made no order for

compensation and costs.

[5] Aggrieved by that part of the order of the Labour Court relating to the

substantive fairness of the dismissal and failure to make an order for

compensation and costs, the appellants applied for leave to appeal

against the whole of the judgment of the Labour Court. Leave was

granted on 28 May 2007.

Factual background

[6] The following facts are either common cause or not in dispute. The

respondent is a municipality established in terms of the Local

Government: Municipal Structures Act 117 of 1998 (the Structures

Act). The process of establishing the respondent involved the

amalgamation of several municipalities, namely Ladysmith, Calitzdorp,

Zoar and Van Wyksdorp.

[7] During 2003, representatives of the South African Local Government

Association (SALGA) (of which the respondent is a member), the first

appellant as well as its sister trade union, the Independent Municipal

and Allied Trade Union (IMATU) entered into a collective agreement

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termed the Organisational Rights Agreement ("the ORA") under the

auspices of the Bargaining Council. The ORA sought to regulate inter

alia, the organisational rights afforded to the trade unions, the conduct

of collective bargaining and the resolution of disputes at national level.

The agreement was binding on all municipalities affiliated to SALGA.

[8] Clause 7 of the ORA made provision for the establishment of Local

Labour Forums at each workplace. The workplaces in this instance

were the member municipalities. Such fora were compulsory dispute

resolution bodies at the workplaces. Disputes could be referred by

either the trade unions or municipalities to these fora. It is important

to note that the Local Labour Forums were not empowered to deal with

matters that are bargained at national and provincial forums. Their

powers and scope were only limited to matters relating to the work

places and which were not the subject of bargaining at either national

and or provincial level.

[9] During December 2002 SALGA, SAMWU and IMATU entered into a

collective agreement which was commonly known as the Placement

Agreement. Clause 3 of the Placement Agreement required each new

municipality to prepare final organograms of all departments and to

submit it to the Local Labour Forums for consultation prior to their

finalisation by the Councils of the municipalities. Should such

consultation at the Local Labour Forums fail to reach consensus, the

concerned municipality had the right to unilaterally adopt and

implement the aforesaid new organogram.

[10]Following its amalgamation, the respondent produced an organogram

containing the proposed structure for the municipality as envisaged by

the Placement Agreement. This organogram was consulted on in the

Local Labour Forum and agreement was reached. Placements in terms

of the organogram were subsequently effected. The date when the

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agreement on the organogram and when it was subsequently

implemented are not provided. However, nothing turns on the said

dates safe to note that the respondent had complied with the

Placement Agreement by submitting the final organograms to the

Local Labour Forum for consultation and an agreement was reached.

[11]During March 2004 an organisation known as Zader Municipal Services

was tasked with investigating the parlous financial state of the

respondent. Out of this exercise a report dated 23 March 2004 known

as the Zader Report was produced. The report made certain

proposals that included a new organogram for the municipality. The

report stated inter alia that the new organogram had been drawn up in

conjunction with the Municipal Manager and Heads of Departments of

the respondent; that there had not been consultation at the Local

Labour Forum and that the consultation process be completed once the

Local Labour Forum had been reconstituted and its powers defined. It

is important to note that the new organogram had the effect of

rendering at least 28 employees redundant as they would not be

catered for in the budget of the respondent.

[12]During the course of the year 2004 the Member of the Executive

Council (MEC) responsible for Local Government and Housing in the

Western Cape Province, acting in terms of Section 106 of the Local

Government: Municipal Systems Act No: 32 of 2000, (the Systems

Act) appointed L A Dekker (Dekker) and Oppelt to conduct an

investigation into the affairs of the respondent. There were at that

time serious allegations of maladministration at the respondent.

Dekker testified that he is an attorney specialising in Labour Law and

Municipal Law. He had been in the municipal field for about thirty

years and also ten years doing Labour matters. The investigating team

produced a report on its activities dated 16 April 2004. This report

became known as the Dekker Report. All relevant stakeholders

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including the trade unions, councillors, officials and members of the

public participated in the process. Dr Kaap whose entity produced the

Zader Report also made a presentation to the investigating team.

[13]Dekker and Oppelts brief were to investigate alleged

maladministration and allegations concerning corrupt activities that

were taking place at the respondent. The investigators were to gather

evidence, make findings and recommendations to the MEC. The

following are some of the findings of the investigation relevant to this

appeal:

13.1 It was found that the recommendation that was made by a

certain municipal finance official who was appointed to assist the

respondent during 2002 about ways to deal with the

respondents financial deficit were not as yet implemented by

2004;

13.2 Zader Report had established that the income of the respondent

was below than what was budgeted for, and that there had been

personnel appointed without being budgeted for. The team then

prepared a financial recovery plan that was adopted by the

respondent and approved by the MEC. This plan had also not

been implemented;

13.3 Loans and overdrafts were not being repaid;

13.4 Politicians at the respondent were involved in appointing staff.

Through this unauthorised process they improperly appointed

their family members and relatives;

13.5 Staff appointments were made outside the policy framework of

the respondent. The municipal manager was contrary to policy

framework not involved in the appointment process. The staff

policy framework was only one page and proved inadequate;

13.6 Post levels were not allocated and job descriptions were

incomplete. A glaring example is that of a general labourer at

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the cemetery at post level 14, who was rewarded by being

elevated eleven notches up to the position of internal auditor by

the Mayor after he testified in the mayors defence at a rape

trial. Unsurprisingly, the appointee did not have the necessary

qualifications and experience of internal auditor position;

13.7 There were irregular and ad hoc upgrading of post levels without

changing the content of the post or providing reasons for such

steps;

13.8 Appointments, promotions and upgrading of posts were done by

the Local Labour Forum and submitted to the Executive Mayoral

Committe